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Nation states must decide on ecommerce regulations, not the EU

11.09.2017

London, UK - The ecommerce industry has played a pivotal part in driving economic growth throughout the European Union and the rest of the continent. With a population of 742.45 million people, businesses have access to a substantial market of potential customers. In the EU alone, 76.5 per cent of consumers perform online transactions to do their shopping. In 2015, online sales were worth €455 billion and that expanded to €509.9 billion in 2016. Many stores that have benefitted from this sector include Tesco, H&M, Zalando, Bol.com and CDiscount

With Britain set to leave the EU soon, it is vital that trade between British and European businesses is preserved. Ecommerce growth is set to expand by 12 per cent in between 2017-22. Many British ecommerce retailers fear that Brexit is making it harder for them to recruit fresh staff for their warehouses. Robert Kulawik, Chief Executive Officer of Everything5Pounds, an Essex based online-only fashion retailer which opened its doors in 2010, and posted revenues of £22.4 million in 2016, said

Recruitment has become incredibly complex due to many European migrants feeling anxious about relocating to the UK due to Brexit.

David Hordle, managing director of London based independent department store Morley’s, said it is apparent that vacancies were remaining “open longer than they used to”. Kevin Green, chief executive of Recruitment & Employment Confederation, said it “must remain easy for businesses to access staff”.

Leaving the EU will cause the end of the free movement of workers to Britain if it leaves the Single Market. With ecommerce playing an increasingly crucial role in the next decade, the UK should implement a skills-based immigration system so that firms can recruit staff when there is a skills shortage. It would act as a reassurance to businesses concerned about the loss of employees.

However, consumer advocates fear that interference from European institutions could affect product standards individual member states currently enjoy. A draft bill is being debated among Members of the European Parliament to regulate online shoppers’ rights. The European Parliament and national governments are bogged down in negotiations to drastically overhaul the current rights enjoyed by EU citizens. Diplomats from member states will exert pressure on EU institutions to ensure they do not implement significant changes to consumer rules for the sake of it.

Members of the European Parliament want to introduce a mandatory warrant that would last for two years for all products bought online. Pascal Arimont, the Belgian conservative Member of the European Parliament who wrote the bill, has been exerting pressure on European institutions to change the rules so that elevated levels of protection are applied to both online and offline sales. He said that if the rules apply to all transactions, they do not have to discover which law they must abide by when they are purchasing goods.

The European Commission is in a hurry to legislate these changes in time with new Single Market rules due to be introduced next year. They aim to complete it by then because the current executive’s term will end in 2019. EU Justice Commissioner Vera Jourova said that the “European Commission will not be rewriting a new bill during this present time”, which means they will be implementing Mr. Arimont’s proposals.

The European Union must be careful when it is interfering in the ecommerce market. This sector has played a significant role in helping the Eurozone and the European Union grow again. Any laws that prohibit that could wipe out several years of progress.

For example, the online ecommerce industry in Sweden is set to grow by 9 per cent this year. It will be worth 109.5 billion Swedish Krona, or €11.5 billion. These figures were completed by online payment provider Dibs. They predict that the annual turnover of this industry could be as large as the restaurant industry soon. This is due to changing consumer patterns with regards to purchasing goods and an increased number of services being made available online.

By 2021, the size of the ecommerce industry in Sweden is set to enlarge by 45 per cent. In contrast the Ecommerce sector was worth €8 billion in 2013 and is set to be valued at €11.5 billion this year.

BeCommerce, a Belgian association of firms, predicts that ecommerce will be worth 10 billion euros at the end of this year, which is a rapid increase from 4.9 billion euros as the start of 2017. They claim that the strong holiday season and expanding online sales will contribute towards this growth. From January to June 2017, 7.9 million Belgian customers bought 42.3 million products online. The number of online customers expanded by 2 per cent, causing a 10 per cent increase in sales. On average, they have spent 118 euros per online purchase.

Flanders is responsible for this growth. Online retail there was worth €1.47 billion, an increase of 13 per cent from 2016. In Wallonia, the industry is still worth €1 billion, but has still grown by 14 per cent.

Despite this, the European Union is interfering in nation states’ sovereignty to decide its own safeguards for online and offline goods. Therefore, consumer groups fear that Brussels’ legislation could affect protections in individual member states that are currently in use. Many EU countries fear that if the draft law is applied to offline products, they may have to weaken their national consumer protection laws to comply with the new two-year legal warranty period. Agustin Reyna, a senior legal officer at BEUC, the European Consumer Organisation, said that a consequence of this legislation would be that customers lose the rights that they are already used to, which includes a three-year legal guarantee period in Sweden, a six-year period in Ireland or the right against secret defects in Belgium, Luxembourg or France.

The online ecommerce industry should be encouraged to expand by individual nation states and drive growth whilst protecting its consumers. The European Union is again demonstrating its inability to understand how these new markets work whilst stealing nations’ sovereignty to decide its own consumer protection laws for online and offline purchases. The UK and Brussels reaching a mutually beneficial agreement remains top priority as businesses are unable to plan ahead with such uncertainty. As Theresa May triggered Article 50 on 29 March 2017, the UK is scheduled to leave the European Union on Friday, 29 March 2019.

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Matthew Snape is a journalist for Centus UK and specialises in topics relating to the EU and UK economy, politics and payments industry. Matthew is also in the middle of completing the National College for the Training of Journalists qualification.